Question

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Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows along with descriptions of items a through h that require adjusting entries on December 31.

Additional Information Items

1. An analysis of WTI's insurance policies shows that $3,203 of coverage has expired.
2. An inventory count shows that teaching supplies costing $2,776 are available at year-end.
3. Annual depreciation on the equipment is $12,814.
4. Annual depreciation on the professional library is $6,407.
5. On September 1, WTI agreed to do five courses for a client for $2,500 each. Two courses will start immediately and finish before the end of the year. Three courses will not begin until next year. The client paid $12,500 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees.
6. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $9,500 of the tuition has been earned by WTI.
7. WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee.
8. The balance in the Prepaid Rent account represents rent for December.
   

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31
	Debit			Credit
Cash	$	28,151
Accounts receivable		0
Teaching supplies		10,826
Prepaid insurance		16,242
Prepaid rent		2,166
Professional library		32,481
Accumulated depreciation—Professional library				$	9,746
Equipment		96,000
Accumulated depreciation—Equipment					17,325
Accounts payable					22,000
Salaries payable					0
Unearned training fees					12,500
Common stock					24,464
Retained earnings					81,000
Dividends		43,310
Tuition fees earned					110,438
Training fees earned					41,143
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		51,972
Insurance expense		0
Rent expense		23,826
Teaching supplies expense		0
Advertising expense		7,579
Utilities expense		6,063
Totals	$	318,616		$	318,616

2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.
2-b. Prepare an adjusted trial balance.
  

Answer 1

2-a: T Accounts:

Cash					Equipment
Unadj. Bal.	$28,151				Unadj. Bal.	$96,000
Adj. Bal.	$28,151				Adj. Bal.	$96,000
Accounts receivable					Accumulated Depreciation-Equipment
Unadj. Bal.	$0				Unadj. Bal.			$17,325
f	$9,500						c	$12,814
Adj. Bal.	$9,500				Adj. Bal.			$30,139
Teaching Supplies					Accounts payable
Unadj. Bal.	$10,826				Unadj. Bal.			$22,000
		b	$8,050
Adj. Bal.	$2,776				Adj. Bal.			$22,000
Prepaid insurance					Salaries payable
Unadj. Bal.	$16,242				Unadj. Bal.			$0
		a	$3,203				g	$400
Adj. Bal.	$13,039				Adj. Bal.			$400
Prepaid rent					Unearned training fees
Unadj. Bal.	$2,166				Unadj. Bal.			$12,500
		h	$2,166		e	$5,000
Adj. Bal.	$0				Adj. Bal.			$7,500
Professional liabrary					Common stock
Unadj. Bal.	$32,481				Unadj. Bal.			$24,464
Adj. Bal.	$32,481				Adj. Bal.			$24,464
Accumulated depreciation-Professional liabrary					Retained earnings
Unadj. Bal.			$9,746		Unadj. Bal.			$81,000
		d	$6,407
Adj. Bal.			$16,153		Adj. Bal.			$81,000
Tuition fees earned					Dividends
Unadj. Bal.			$110,438		Unadj. Bal.	$43,310
		f	$9,500
Adj. Bal.			$119,938		Adj. Bal.	$43,310
Training fees earned					Rent expense
Unadj. Bal.			$41,143		Unadj. Bal.	$23,826
		e	$5,000		h	$2,166
Adj. Bal.			$46,143		Adj. Bal.	$25,992
Depreciation expense-Professional library					Teaching supplies expense
Unadj. Bal.	$0				Unadj. Bal.	$0
d	$6,407				b	$8,050
Adj. Bal.	$6,407				Adj. Bal.	$8,050
Depreciation expense-Equipment					Advertising expense
Unadj. Bal.	$0				Unadj. Bal.	$7,579
c	$12,814
Adj. Bal.	$12,814				Adj. Bal.	$7,579
Salaries expense					Utilities expense
Unadj. Bal.	$51,972				Unadj. Bal.	$6,063
g	$400
Adj. Bal.	$52,372				Adj. Bal.	$6,063
Insurance expense
Unadj. Bal.	$0
a	$3,203
Adj. Bal.	$3,203

2-b: Trial Balance:

WELLS TECHNICAL INSTITUE
Adjusted Trial Balance
December 31
Account title	Debit	Credit
Cash	$28,151
Accounts receivable	$9,500
Teaching Supplies	$2,776
Prepaid insurance	$13,039
Prepaid rent	$0
Professional liabrary	$32,481
Accumulated depreciation-Professional liabrary		$16,153
Equipment	$96,000
Accumulated Depreciation-Equipment		$30,139
Accounts payable		$22,000
Salaries payable		$400
Unearned training fees		$7,500
Common stock		$24,464
Retained earnings		$81,000
Dividends	$43,310
Tuition fees earned		$119,938
Training fees earned		$46,143
Depreciation expense-Professional library	$6,407
Depreciation expense-Equipment	$12,814
Salaries expense	$52,372
Insurance expense	$3,203
Rent expense	$25,992
Teaching supplies expense	$8,050
Advertising expense	$7,579
Utilities expense	$6,063
Total	$347,737	$347,737